Cost cuts boost Viacom 4Q but ad sales weak

(AP) — Cost-cutting at Paramount Pictures boosted profits at media giant Viacom Inc., but advertisers remained cautious about spending money during the holiday quarter.

Ad revenue fell 3 percent overall in the three months to December on Viacom cable channels such as Nickelodeon, BET and Comedy Central. That reflected ongoing economic uncertainty that kept companies hesitant about how much to spend to entice customers.

"Domestic unemployment continues to be a serious concern for all marketers, but we do see growing signs of strength," Chief Executive Philippe Dauman said on a conference call Thursday. Viacom expects an improvement in ad revenue in the current quarter compared to the last.

Dauman said Viacom will invest more money on new programs to boost audience numbers at MTV in the hope that advertisers will follow. MTV has already decided to bring Nicole "Snooki" Polizzi and her partying "Jersey Shore" friends back for a second season.

"And that, as Snooki would say, is a very good situation indeed," Dauman said.

Overall, the company, which is controlled by its executive chairman, Sumner Redstone, earned $694 million, or $1.14 per share, in the last three months of 2009. That was quadruple the $173 million, or 28 cents per share, it earned in the same period a year earlier.

Revenue slipped 3 percent to $4.1 billion, but total expenses fell 20 percent to $3 billion, helped by restructuring at Paramount.

One reason for the profit jump was a $454 million charge a year ago related to layoffs. Adjusted to strip out one-time items, earnings were up more modestly to $1.09 per share from 76 cents a year ago.

The profit figure beat the forecast of analysts polled by Thomson Reuters, who expected 88 cents per share. They predicted slightly better revenue of $4.2 billion.

Viacom's Class B shares rose 34 cents, or 1.2 percent, to $28.89 in afternoon trading Thursday.

Paramount generated its greatest annual profit in seven years after reducing its overhead and distribution costs, partly by focusing on a smaller slate of films. It had $298 million in fourth-quarter operating profits, up from $84 million in the same quarter of 2008 — even though revenue fell 1 percent to $1.79 billion.

The studio also benefited from the success of micro-budget horror flick "Paranormal Activity" as well as the home video release of "Transformers 2: Revenge of the Fallen," ''Star Trek" and "G.I. Joe: The Rise of Cobra."

Media networks revenue fell 6 percent to $2.33 billion, brought down by the drop in ad revenue and lower sales of bundles of its "Rock Band" video game. But operating income rose 3 percent thanks to cost reductions.

Full-year earnings totaled $1.61 billion, or $2.65 per share, compared with $1.25 billion, or $2 per share, the year before. Revenue fell 7 percent to $13.62 billion.

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AP Business Writer Andrew Vanacore in New York contributed to this report.